The Shakedown 3-23-25

by Shake P
Choppy action all week and we walked into an obvious bear flag Friday in both the SPY and QQQ. We gapped down and it appeared bears could easily have had continuation selling -- but that did not happen. We opened at major support, briefly pushed lower then got bought up the entire day. Sellers absolutely dried up. Is this failed bear flag enough to actually lead to a bounce?
Friday's lows become VERY important. I go over this in much more detail in the section below.
 
I think there are some decent bottom-bounce setups out there this week with names that have been taken dramatically lower in a hurry finally looking for a relief bounce. While looking for a bounce, I'm very cognizant of the fact we're in a greater downtrend and that next wave of selling could come in at any time. Right now the market is guilty until proven innocent.
 
In this corrective phase of the market, it's difficult to predict the day by day action. Broadly though, this is the action I am looking for. Currently, in my view, the market is at the "B" point, looking for an oversold, dead-cat bounce. Looking for a 1-2 week rally to begin. Once we retest resistance areas within this greater downtrend though, I believe it will lead to another massive selloff. We haven't seen any real panic selling in the broad market, although it's been a very fast down move. We have not seen anything close to capitulation selling yet, which leads me to believe we'll be able to bounce, but another big selloff is around the corner once the short term bounce is done. 
 
 
 
 
 
 
Friday's action gave us a ton of information. First, the QQQ was relatively stronger than the SPY for the first time in weeks. Second, the QQQ is sitting within an obvious bear flag on the daily right now. It does not take 10 years in the market to see that. Friday we opened lower at the bottom of the flag, and you have to be thinking, "ok this is it, next leg down." But, there was zero selling volume in that area. That is BIG information. These bear markets are never easy because there are fake-out moves galore. They want to trap buyers and sellers and take them the other way. I still do not believe the 'lows' are in and we see this crazy V bottom back to highs. But with sellers drying up at the bottom end of the range, the combination of QQQ/tech relative strength + weak volume in a spot bears could have easily taken us lower, but they did not. This has me thinking we are able to get that 1-2 week bounce.
 
While we're bouncing back into major resistance, I may look for a few long trades for the bounce, but I am still under the view a bounce would only be for sellers to power up and take us to new lows from there. ALSO, we have seen Friday pivots multiple times in this down cycle that has us thinking a bounce is next. Then it is invalidated early in the following week. So, if Friday's action is simply negated Monday, a move through Friday's lows is surely to lead a climactic move lower.
 

 
Economic Data This Week

 
Upcoming Earnings
 
 
Earnings Watchlist
 
 
Posting some of the strongest charts I've found. If I take any trades in these names, they are short term and I would look to sell into strength versus be stopped out like in healthy environments.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHINA
 
ENERGY
 
 

 
 
OKTA Long
 
 
 
 
What a beautiful setup we have here in OKTA. Firstly, this stock has held up tremendously given the trading environment. Secondly, not only is it a beautiful earnings flag, but also perfectly trying to break out of a stage 1 base. Watching 115/115.50 for an entry this week.
 
Trigger: 115/115.50
Stop: 110.49
Target: 130-140+

Leave a comment

Back to News